Taxation of Non-Doms and Non-Residents
What are non-domiciled residents and non-residents?
In the eyes of UK tax legislation, residents, non-residents, and non-domiciled residents are treated differently – and there are unique tax planning opportunities for each category.
With regard to the taxation of non-doms, foreign nationals living in the UK are typically classed as ‘non-domiciled’ residents. This means that whilst the individual is considered a tax resident, their ‘domicile’ tends to remain their country of origin. However, as of April 6th 2017, individuals who have lived in the UK for 15 of the previous 20 years will be effectively deemed as UK domiciled for the purposes of taxation.
An individual is automatically a non-resident if they spend fewer than 16 days in the UK in the relevant tax year (if they have been a tax resident in either of last three years) or work abroad full time (averaging 35 hours a week at least) and spend fewer than 91 days in the UK (of which 30 or less were spent working) if they have not been a resident in either of the last three tax years. Non-residents typically pay tax only on their UK income. For individuals with situations that are too complex to meet the conditions above, it may be necessary to make use of the HMRC Statutory Residence Test.
Taxation of non-doms and non-residents: how we can help
Non-Resident Tax Planning
Clarifying your tax residence status can be complicated. Even if you no longer live in the UK, you may still be required to complete a tax return (if you are a director of a UK company or make gains from disposing of an asset based in the UK, for instance). As such, it is highly advisable that you consult with a chartered tax accountant to avoid penalties, paying disproportionate amounts of tax, and to ensure that all necessary information is disclosed to HMRC.
If you currently reside in the UK but are considering a move abroad, preparation and planning is essential to make certain that you avoid any pitfalls. An IBISS & Co tax accountant will help ease the transition process, overseeing a range of matters related to taxation of non-doms and non-residents, including:
- Clarifying the implications for your earnings, assets, and investment income (due to income tax and CGT), and undertaking suitable tax planning.
- Reviewing contracts of employment.
- Working out the number of days you can spend in the UK without affecting your non-resident status; planning departure/re-entry dates.
Non-Dom Tax Planning
Non-UK domiciled individuals can elect to be taxed on the ‘remittance’ basis. Provided that specific conditions are met, electing to be taxed in this way allows the individual to avoid paying UK tax on non-UK assets and income. However, when it comes to taxation of non-doms, the rules are complex and there are various limitations in place; moreover – as with all legislation – regulations are subject to change. If you are a non-dom, it is therefore crucial that you engage an experienced tax consultant to formulate an effective tax strategy.
Undertaking bespoke tax planning with IBISS & CO can significantly reduce your non-dom tax liability (as well as that of your family members), so it is well worth the investment. Our services include – but are not limited to – the following:
- Establishing your UK tax status.
- Planning for CGT and corporate tax.
- Planning for personal tax.
- Advising on inheritance tax and related planning.
- Assistance with will writing.
- Remittance-based tax planning.
- Business exit strategies.
- Advising on the utilisation of offshore companies.
At IBISS & Co, we provide a full portfolio of services to manage taxation of non-doms and non-residents: from accountancy to specialised tax consultancy. Your tax affairs will be looked after by our multi-disciplinary, expert team, with everything catered for under one roof; a unique proposition that means we can provide an outstandingly comprehensive yet cost-effective bespoke tax planning service to our clients. Contact us today to learn more.